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2016 COLA Rate to be Announced in January

[Posted on 11/30/2015 at 9:24 AM]

If your annual cost-of-living adjustment, or COLA, is based on the Consumer Price Index (CPI),* you will find the COLA for 2016 on the MOSERS website on January 21st. The reason we cannot determine the rate yet is because the calculation is based on 80% of the percentage increase in the average CPI from one year to the next with a maximum increase of 5% (minimum 0%). The 2016 rate will be based on the comparison from 2014 to 2015, for which the information is not yet available. In the meantime, here is a reminder of how it is determined each year.

The CPI is calculated monthly by the Federal Bureau of Labor Statistics. The CPI is used to measure the rate of inflation and to show larger economic trends on a yearly basis. MOSERS must use the Consumer Price Index for All Urban Consumers (CPI-U) for our calculations as required by state law. The CPI-U is the most comprehensive measure of inflation in consumer goods and services, including food, housing and transportation. CPI calculations are based on information from average households across the country. The impact of inflation on you personally may be more or less than the national average.

Each January, MOSERS compares the average CPI for the calendar year just completed (2015) to the average CPI from the prior year (2014) to determine the percentage change between the two years. You will not receive a COLA less than zero. (In other words, MOSERS will never decrease your benefit amount based on the CPI calculation.)

To learn more about the CPI, visit the Bureau of Labor Statistics list of Frequently Asked Questions (FAQs) on their website. MOSERS also has a COLA page on our website with links and a helpful video.

*If you retired under the MSEP, and were hired before August 28, 1997, your COLA will be determined based on the annual COLA calculation except that you will receive a minimum 4% COLA (maximum 5%) until accumulated COLAs reach 65% of your initial (or original) benefit. This is called your COLA cap. Then, your COLA will be calculated like other retirees and will be between 0-5% each year.

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